Is there a “Wealth Bubble”? That’s the intriguing question a pair of economists posed in new research, and their answer is a resounding “Yes”!
Former Federal Reserve economist Daniel Thorton and partner Joe Carson say that asset values have soared since 2009, driving household net worth to a record 653% of disposable personal income last year.
But a whopping 94% of the rise stemmed from price appreciation, rather than new inflows of money. The last two times that happened, we ended with epic busts – first in tech stocks, then in housing. Hmm.
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Since household net worth is measured in currency, then the only things left to crash are currencies and the debt (bond) markets that support them. It should be an interesting ride.